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Delay In Health Reform Penalties For Employers Leaves Many Issues Still To Resolve

While the announcement that employer shared responsibility penalties will not apply until 2015 was a welcome relief for employers, addressing the fundamental challenges raised by the reform law remains a priority. At the heart of the matter is cost. In the short-term, new fees, plan design changes and the expectation of additional enrollment will add an estimated 2%-3% or more to health plan cost in 2014, even if employers table plans to extend coverage to all employees working 30 or more hours per week. Longer-term, avoiding the excise tax on high-cost plans slated for 2018 remains a daunting challenge. More than a third of employers surveyed by Mercer in May said that they were taking steps in 2014 to help bring down cost by 2018.

“The delay will give employers more time to cope with some of the requirements, but they know it’s no free pass,” said Julio Portalatin, President and CEO of Mercer. “We expect employers to stay 100% focused on cost management. Last year they slowed benefit cost growth to its lowest level in 15 years, but in 2014 they have the new fees and the likelihood of new enrollment to contend with, on top of normal medical inflation. As employers evolve their go-forward benefit strategies, private exchanges, such as Mercer Marketplace
SM, continue to be a powerful strategy for corporate cost management and expanded employee customized choice.”

Mercer expects employers to continue to prepare for compliance. In May, about a fourth of employers surveyed hadn’t yet decided how they would track and report variable employee work hours and a third hadn’t decided what look-back period to use. The delay gives them more time to address these administrative challenges. The Treasury department has suggested that proposed Reporting and Disclosure regulations will be provided this summer. However, public exchanges, which are slated to be operational in 2014, may still reach out to employers to verify applicant eligibility for health insurance.